Coin Market
Can AI bots steal your crypto? The rise of digital thieves
Published
12 hours agoon
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What are AI bots?
AI bots are self-learning software that automates and continuously refines crypto cyberattacks, making them more dangerous than traditional hacking methods.
At the heart of today’s AI-driven cybercrime are AI bots — self-learning software programs designed to process vast amounts of data, make independent decisions, and execute complex tasks without human intervention. While these bots have been a game-changer in industries like finance, healthcare and customer service, they have also become a weapon for cybercriminals, particularly in the world of cryptocurrency.
Unlike traditional hacking methods, which require manual effort and technical expertise, AI bots can fully automate attacks, adapt to new cryptocurrency security measures, and even refine their tactics over time. This makes them far more effective than human hackers, who are limited by time, resources and error-prone processes.
Why are AI bots so dangerous?
The biggest threat posed by AI-driven cybercrime is scale. A single hacker attempting to breach a crypto exchange or trick users into handing over their private keys can only do so much. AI bots, however, can launch thousands of attacks simultaneously, refining their techniques as they go.
Speed: AI bots can scan millions of blockchain transactions, smart contracts and websites within minutes, identifying weaknesses in wallets (leading to crypto wallet hacks), decentralized finance (DeFi) protocols and exchanges.Scalability: A human scammer may send phishing emails to a few hundred people. An AI bot can send personalized, perfectly crafted phishing emails to millions in the same time frame.Adaptability: Machine learning allows these bots to improve with every failed attack, making them harder to detect and block.
This ability to automate, adapt and attack at scale has led to a surge in AI-driven crypto fraud, making crypto fraud prevention more critical than ever.
In October 2024, the X account of Andy Ayrey, developer of the AI bot Truth Terminal, was compromised by hackers. The attackers used Ayrey’s account to promote a fraudulent memecoin named Infinite Backrooms (IB). The malicious campaign led to a rapid surge in IB’s market capitalization, reaching $25 million. Within 45 minutes, the perpetrators liquidated their holdings, securing over $600,000.
How AI-powered bots can steal cryptocurrency assets
AI-powered bots aren’t just automating crypto scams — they’re becoming smarter, more targeted and increasingly hard to spot.
Here are some of the most dangerous types of AI-driven scams currently being used to steal cryptocurrency assets:
1. AI-powered phishing bots
Phishing attacks are nothing new in crypto, but AI has turned them into a far bigger threat. Instead of sloppy emails full of mistakes, today’s AI bots create personalized messages that look exactly like real communications from platforms such as Coinbase or MetaMask. They gather personal information from leaked databases, social media and even blockchain records, making their scams extremely convincing.
For instance, in early 2024, an AI-driven phishing attack targeted Coinbase users by sending emails about fake cryptocurrency security alerts, ultimately tricking users out of nearly $65 million.
Also, after OpenAI launched GPT-4, scammers created a fake OpenAI token airdrop site to exploit the hype. They sent emails and X posts luring users to “claim” a bogus token — the phishing page closely mirrored OpenAI’s real site. Victims who took the bait and connected their wallets had all their crypto assets drained automatically.
Unlike old-school phishing, these AI-enhanced scams are polished and targeted, often free of the typos or clumsy wording that is used to give away a phishing scam. Some even deploy AI chatbots posing as customer support representatives for exchanges or wallets, tricking users into divulging private keys or two-factor authentication (2FA) codes under the guise of “verification.”
In 2022, some malware specifically targeted browser-based wallets like MetaMask: a strain called Mars Stealer could sniff out private keys for over 40 different wallet browser extensions and 2FA apps, draining any funds it found. Such malware often spreads via phishing links, fake software downloads or pirated crypto tools.
Once inside your system, it might monitor your clipboard (to swap in the attacker’s address when you copy-paste a wallet address), log your keystrokes, or export your seed phrase files — all without obvious signs.
2. AI-powered exploit-scanning bots
Smart contract vulnerabilities are a hacker’s goldmine, and AI bots are taking advantage faster than ever. These bots continuously scan platforms like Ethereum or BNB Smart Chain, hunting for flaws in newly deployed DeFi projects. As soon as they detect an issue, they exploit it automatically, often within minutes.
Researchers have demonstrated that AI chatbots, such as those powered by GPT-3, can analyze smart contract code to identify exploitable weaknesses. For instance, Stephen Tong, co-founder of Zellic, showcased an AI chatbot detecting a vulnerability in a smart contract’s “withdraw” function, similar to the flaw exploited in the Fei Protocol attack, which resulted in an $80-million loss.
3. AI-enhanced brute-force attacks
Brute-force attacks used to take forever, but AI bots have made them dangerously efficient. By analyzing previous password breaches, these bots quickly identify patterns to crack passwords and seed phrases in record time. A 2024 study on desktop cryptocurrency wallets, including Sparrow, Etherwall and Bither, found that weak passwords drastically lower resistance to brute-force attacks, emphasizing that strong, complex passwords are crucial to safeguarding digital assets.
4. Deepfake impersonation bots
Imagine watching a video of a trusted crypto influencer or CEO asking you to invest — but it’s entirely fake. That’s the reality of deepfake scams powered by AI. These bots create ultra-realistic videos and voice recordings, tricking even savvy crypto holders into transferring funds.
5. Social media botnets
On platforms like X and Telegram, swarms of AI bots push crypto scams at scale. Botnets such as “Fox8” used ChatGPT to generate hundreds of persuasive posts hyping scam tokens and replying to users in real-time.
In one case, scammers abused the names of Elon Musk and ChatGPT to promote a fake crypto giveaway — complete with a deepfaked video of Musk — duping people into sending funds to scammers.
In 2023, Sophos researchers found crypto romance scammers using ChatGPT to chat with multiple victims at once, making their affectionate messages more convincing and scalable.
Similarly, Meta reported a sharp uptick in malware and phishing links disguised as ChatGPT or AI tools, often tied to crypto fraud schemes. And in the realm of romance scams, AI is boosting so-called pig butchering operations — long-con scams where fraudsters cultivate relationships and then lure victims into fake crypto investments. A striking case occurred in Hong Kong in 2024: Police busted a criminal ring that defrauded men across Asia of $46 million via an AI-assisted romance scam.
Automated trading bot scams and exploits
AI is being invoked in the arena of cryptocurrency trading bots — often as a buzzword to con investors and occasionally as a tool for technical exploits.
A notable example is YieldTrust.ai, which in 2023 marketed an AI bot supposedly yielding 2.2% returns per day — an astronomical, implausible profit. Regulators from several states investigated and found no evidence the “AI bot” even existed; it appeared to be a classic Ponzi, using AI as a tech buzzword to suck in victims. YieldTrust.ai was ultimately shut down by authorities, but not before investors were duped by the slick marketing.
Even when an automated trading bot is real, it’s often not the money-printing machine scammers claim. For instance, blockchain analysis firm Arkham Intelligence highlighted a case where a so-called arbitrage trading bot (likely touted as AI-driven) executed an incredibly complex series of trades, including a $200-million flash loan — and ended up netting a measly $3.24 in profit.
In fact, many “AI trading” scams will take your deposit and, at best, run it through some random trades (or not trade at all), then make excuses when you try to withdraw. Some shady operators also use social media AI bots to fabricate a track record (e.g., fake testimonials or X bots that constantly post “winning trades”) to create an illusion of success. It’s all part of the ruse.
On the more technical side, criminals do use automated bots (not necessarily AI, but sometimes labeled as such) to exploit the crypto markets and infrastructure. Front-running bots in DeFi, for example, automatically insert themselves into pending transactions to steal a bit of value (a sandwich attack), and flash loan bots execute lightning-fast trades to exploit price discrepancies or vulnerable smart contracts. These require coding skills and aren’t typically marketed to victims; instead, they’re direct theft tools used by hackers.
AI could enhance these by optimizing strategies faster than a human. However, as mentioned, even highly sophisticated bots don’t guarantee big gains — the markets are competitive and unpredictable, something even the fanciest AI can’t reliably foresee.
Meanwhile, the risk to victims is real: If a trading algorithm malfunctions or is maliciously coded, it can wipe out your funds in seconds. There have been cases of rogue bots on exchanges triggering flash crashes or draining liquidity pools, causing users to incur huge slippage losses.
How AI-powered malware fuels cybercrime against crypto users
AI is teaching cybercriminals how to hack crypto platforms, enabling a wave of less-skilled attackers to launch credible attacks. This helps explain why crypto phishing and malware campaigns have scaled up so dramatically — AI tools let bad actors automate their scams and continuously refine them based on what works.
AI is also supercharging malware threats and hacking tactics aimed at crypto users. One concern is AI-generated malware, malicious programs that use AI to adapt and evade detection.
In 2023, researchers demonstrated a proof-of-concept called BlackMamba, a polymorphic keylogger that uses an AI language model (like the tech behind ChatGPT) to rewrite its code with every execution. This means each time BlackMamba runs, it produces a new variant of itself in memory, helping it slip past antivirus and endpoint security tools.
In tests, this AI-crafted malware went undetected by an industry-leading endpoint detection and response system. Once active, it could stealthily capture everything the user types — including crypto exchange passwords or wallet seed phrases — and send that data to attackers.
While BlackMamba was just a lab demo, it highlights a real threat: Criminals can harness AI to create shape-shifting malware that targets cryptocurrency accounts and is much harder to catch than traditional viruses.
Even without exotic AI malware, threat actors abuse the popularity of AI to spread classic trojans. Scammers commonly set up fake “ChatGPT” or AI-related apps that contain malware, knowing users might drop their guard due to the AI branding. For instance, security analysts observed fraudulent websites impersonating the ChatGPT site with a “Download for Windows” button; if clicked, it silently installs a crypto-stealing Trojan on the victim’s machine.
Beyond the malware itself, AI is lowering the skill barrier for would-be hackers. Previously, a criminal needed some coding know-how to craft phishing pages or viruses. Now, underground “AI-as-a-service” tools do much of the work.
Illicit AI chatbots like WormGPT and FraudGPT have appeared on dark web forums, offering to generate phishing emails, malware code and hacking tips on demand. For a fee, even non-technical criminals can use these AI bots to churn out convincing scam sites, create new malware variants, and scan for software vulnerabilities.
How to protect your crypto from AI-driven attacks
AI-driven threats are becoming more advanced, making strong security measures essential to protect digital assets from automated scams and hacks.
Below are the most effective ways on how to protect crypto from hackers and defend against AI-powered phishing, deepfake scams and exploit bots:
Use a hardware wallet: AI-driven malware and phishing attacks primarily target online (hot) wallets. By using hardware wallets — like Ledger or Trezor — you keep private keys completely offline, making them virtually impossible for hackers or malicious AI bots to access remotely. For instance, during the 2022 FTX collapse, those using hardware wallets avoided the massive losses suffered by users with funds stored on exchanges.Enable multifactor authentication (MFA) and strong passwords: AI bots can crack weak passwords using deep learning in cybercrime, leveraging machine learning algorithms trained on leaked data breaches to predict and exploit vulnerable credentials. To counter this, always enable MFA via authenticator apps like Google Authenticator or Authy rather than SMS-based codes — hackers have been known to exploit SIM swap vulnerabilities, making SMS verification less secure.Beware of AI-powered phishing scams: AI-generated phishing emails, messages and fake support requests have become nearly indistinguishable from real ones. Avoid clicking on links in emails or direct messages, always verify website URLs manually, and never share private keys or seed phrases, regardless of how convincing the request may seem.Verify identities carefully to avoid deepfake scams: AI-powered deepfake videos and voice recordings can convincingly impersonate crypto influencers, executives or even people you personally know. If someone is asking for funds or promoting an urgent investment opportunity via video or audio, verify their identity through multiple channels before taking action.Stay informed about the latest blockchain security threats: Regularly following trusted blockchain security sources such as CertiK, Chainalysis or SlowMist will keep you informed about the latest AI-powered threats and the tools available to protect yourself.
The future of AI in cybercrime and crypto security
As AI-driven crypto threats evolve rapidly, proactive and AI-powered security solutions become crucial to protecting your digital assets.
Looking ahead, AI’s role in cybercrime is likely to escalate, becoming increasingly sophisticated and harder to detect. Advanced AI systems will automate complex cyberattacks like deepfake-based impersonations, exploit smart-contract vulnerabilities instantly upon detection, and execute precision-targeted phishing scams.
To counter these evolving threats, blockchain security will increasingly rely on real-time AI threat detection. Platforms like CertiK already leverage advanced machine learning models to scan millions of blockchain transactions daily, spotting anomalies instantly.
As cyber threats grow smarter, these proactive AI systems will become essential in preventing major breaches, reducing financial losses, and combating AI and financial fraud to maintain trust in crypto markets.
Ultimately, the future of crypto security will depend heavily on industry-wide cooperation and shared AI-driven defense systems. Exchanges, blockchain platforms, cybersecurity providers and regulators must collaborate closely, using AI to predict threats before they materialize. While AI-powered cyberattacks will continue to evolve, the crypto community’s best defense is staying informed, proactive and adaptive — turning artificial intelligence from a threat into its strongest ally.
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Crypto users report new scam emails spoofing Coinbase, Gemini
Published
2 hours agoon
March 17, 2025By
Crypto users have reported a rise in scam emails made to look like they’re from crypto exchanges Coinbase and Gemini that attempt to get users to set up a new wallet with pre-generated recovery phrases controlled by scammers.
In several examples posted to X, the email claims to be from Coinbase, asking users to transition to self-custodial wallets and providing instructions on downloading the legitimate Coinbase Wallet, giving a deadline of April 1 to make the switch.
Source: Steve Kaczynski
However, it also provides pre-generated recovery phrases. Once users open a new wallet with those phrases and transfer funds, all the assets will be available to the threat actor, who could drain the wallet.
The email mentions a class-action lawsuit against Coinbase alleging it has sold unregistered securities, which has resulted in a court mandating users manage their own wallets.
“Coinbase will operate as a registered broker, allowing purchases, but all assets must move to Coinbase Wallet,” the phony email says.
The US Securities and Exchange Commission dismissed its lawsuit alleging Coinbase was an unregistered broker and selling unregistered securities on Feb. 27.
Coinbase told Cointelegraph it is aware of the scam and pointed to its March 14 post to X, saying, “We will never send you a recovery phrase, and you should never enter a recovery phrase given to you by someone else.”
Source: Coinbase Support
Crypto exchange Gemini has also been spoofed with the same recovery phrase email scam, using the same tactics and claiming users need to set up a new wallet because of a recent court decision.
Gemini was being sued by the SEC for allegedly offering unregistered securities through its earn program. The regulator opted to end the legal action on Feb. 26.
Source: Sukesh Tedla
Gemini didn’t immediately respond to Cointelegraph’s request for comment.
Blockchain security firm CertiK’s annual Web3 security report flagged crypto phishing attacks, which cost users $1 billion across 296 incidents, as the most significant security threat for 2024.
Related: California financial regulator warns of 7 new types of crypto, AI scams
The email scams come as at least three crypto founders have reported foiling an attempt from alleged North Korean hackers to steal sensitive data through fake Zoom calls.
Scammers have been targeting crypto founders by offering a meeting to discuss a partnership opportunity, but once the call starts, they send a message feigning audio issues and a link to a new call that installs malware.
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Crypto platform Debiex must pay $2.5M in CFTC ‘pig butchering’ case
Published
2 hours agoon
March 17, 2025By
Crypto platform Debiex has been ordered to pay around $2.5 million after it failed to respond to a US Commodity Futures Trading Commission suit accusing it of being a romance scam ring.
Arizona federal court Judge Douglas Rayes on March 13 granted the CFTC’s earlier motion for summary judgment in its case and ordered Debiex to pay back around $2.26 million it stole from its customers, along with a civil penalty of nearly $221,500.
Judge Rayes said there was no evidence that Debiex’s failure to respond to the CFTC was the result of “excusable neglect.”
The CFTC sued Debiex in January 2024, saying its staff ran a so-called “pig butchering” scam, where they initiated romantic relationships with customers over social media to gain trust to convince them to invest in the platform.
The scheme hooked five victims who deposited around $2.3 million in total onto Debiex, which the purported trading platform stole, the CFTC said.
A highlighted excerpt of Judge Rayes’ order summarizing the CFTC’s case against Debiex, Source: CourtListener
The CFTC also accused Zhāng Chéng Yáng of being a “money mule” for Debiex, whose crypto wallets were used to accept and steal victims’ funds.
Judge Rayes granted a CFTC motion for default judgment against Zhāng on March 12, finding it adequately alleged he controls a crypto wallet with OKX “that received digital assets to which he had no legitimate claim.”
He said OKX was “voluntarily preserving” the crypto in Zhāng’s account and ordered its contents, consisting of $5.70 worth of Tether (USDT) and nearly 63 Ether (ETH) worth around $119,500, to be transferred to an unnamed victim.
The CFTC said in its January 2024 complaint that Debiex’s scheme saw its unknown managers target potential victims through social media to lure them to websites it had created marketing itself as a “Blockchain Network Decentralized perpetual contract trading platform” where users can conduct futures trading and “Mining transactions.”
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Debiex’s staff would present as females and built a rapport with victims through “continuous and repeated messaging and sharing purported pictures of themselves” while claiming to be “highly successful digital asset commodities traders,” the CFTC said.
Once an account was created and the customers sent over their crypto, the CFTC said Debiex would share “fictitious information” about customer balances, trading positions and profits.
“All of this information was most likely false,” the CFTC said. “The evidence shows that the Customers’ digital assets were simply sent to numerous digital asset wallets in an attempt to obfuscate their destination.”
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Bitcoin landfill man loses appeal, says he has one ‘last legal option’
Published
3 hours agoon
March 17, 2025By
A UK man’s bid to obtain a permit to search a landfill for his hard drive — holding private keys to 8,000 Bitcoin — has been rejected by the UK Court of Appeals.
“Appeal request to the Royal Court of Appeal: refused,” Howells said in a March 14 X post.
“The Great British Injustice System strikes again… The state always protects the state,” the early Bitcoin adopter added before revealing his “next stop” would be the European Convention on Human Rights (ECHR).
UK Royal Court of Appeal Judge Christopher Nugee knocked back Howells’ application, stating that there was no “real prospect of success” and there was “no other compelling reason” as to why it should be heard, according to a March 13 filing shared with Cointelegraph.
Source: James Howells
Nugee’s decision follows an earlier dismissal on Jan. 9 from High Court Judge Andrew Keyser, who similarly said there was “no realistic prospect” of Howells’ case succeeding at a full trial.
In a note to Cointelegraph, Howell said his “last legal option” to exhaust is at the ECHR — where he will claim that the UK High Court and UK Court of Appeal breached his right to property and right to a fair trial under Article 1 of Protocol 1 and Article 6 of the ECHR.
“The British establishment want to sweep this under the carpet, and i will not let them. It will not go away — no matter how long it takes!”
The ECHR cannot overrule a UK court decision — however, a verdict in Howells’ favor would call on the UK courts to consider whether its legislation was interpreted in a way that is compatible with the ECHR’s provisions.
In a separate statement shared with Cointelegraph, Howells said he would file a claim to the ECHR in the “coming weeks.”
The court filings follow repeated rejections from the Newport City Council allowing Howells to search through the Docksway landfill — where Howells’ former partner disposed of a bag containing the hard drive at the site in 2013.
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Howells’ 8,000 Bitcoin (BTC) is worth around $660 million at current prices. While few predicted Bitcoin would reach such heights back then, Howells’ incident illustrates the importance of properly securing self-custodied crypto funds.
Howells also appears to be running out of time, as the Docksway landfill is reportedly set to shut down sometime during the UK’s 2025-2026 financial year, BBC News reported on Feb. 9.
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